Traversing the Entrepreneur’s Valley of Death with a Business Plan

The business plan is a bridge that extends from initial startup to plans for long range success. That bridge crosses a wide canyon that includes seed money, angel investors and eventually venture capitalism and commercial funds. The first round of funding by angel investors is enough to get the business established and generating income through modest growth, but at some point for successful businesses the funding chasm becomes wide and deep. This Valley of Death, as the $2 million to $5 million is not so affectionately called,  can kill young businesses if it’s not traversed with injections of new venture capital investment money. On the other side of the valley can be found business loans from traditional lenders meaning the company is now poised for unlimited growth.

There’s a lot of debate on whether this valley really exists. Many business analysts believe there is always money for market worthy companies that need cash. This is based on the assumption that inefficient companies or companies with products that don’t succeed in the marketplace will drop out of the running for funding. That leaves the companies with competitive products and services looking for funding. Angel investors play an important role in this process because they fund companies with the well designed business models and that are most likely to succeed over the long run based on their analysis. The poorly prepared business plan and angel investors act like culling tools and force bad ideas out of the funding process early in the process.

Crossing the Valley of Death will take a concerted effort to find multiple sources of funding in many cases. For example, young entrepreneurs can bridge the gap by vigorously blending venture capital with government tax credits. A fairly new concept is the ‘certified capital company’ in which a state issues tax credits to companies in return for making investments in young businesses ready to cross the Valley of Death. There are a number of new and creative funding concepts being introduced across the nation to stimulate job growth and economic development.

In other words, if you need angel funding or are facing the Valley of Death, rest assured that professionals familiar with the funding environment can steer you to funding arrangements you may not even be aware exist. If you see the Valley of Death looming, it only means you have been successful already.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Don’t Hype the Business Plan

A business plan is a living breathing document in that it can help you obtain capital through angel investors and then serve as the blueprint for goals and strategies. However, the business plan filled with hype is dead on arrival during fund raising because business plan readers will quickly recognize over-promising exuberance not based in reality. You may have an amazing idea and believe it’s a wide open market niche with no competition, but can you prove so?

Though angel investors are not financial institutions, they still rely on solid market and financial evidence for decision making. Using an abundance of words like ‘unprecedented’ and ‘one of a kind’ sends a signal that you have not done in-depth market research. Even if you have done the research, these kinds of hype words set a tone of naiveté and inexperience because very few products are unprecedented and lack competition.

As you write the business plan with the intent of submitting to angel investors, the words you need to be thinking should be more along the lines of ‘proven’, ‘accomplishments’ and ‘competition.’ If you say that your product is unprecedented then that word needs to be supported by third-party market research proving to the best of their ability that you have actually developed a radically new product.  Even in that case, you also must still prove that an expanded market will want to buy your unprecedented product before angel investors will capitalize your startup. An unsold unprecedented product has no value.

Avoiding the hype in a business plan takes discipline because entrepreneurs are naturally excited about their initial stage of business growth. Hype makes your job of selling a business plan to angel investors much harder than it needs to be. Avoid the hype and the business plan begins on solid ground, and from there your fund raising chances can only go up.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Removing Barriers to Minority Business Success

The minority business owner developing a business plan can do so with the knowledge that angel investors offer non-traditional funding sources that break down barriers to opportunity. It’s no secret that minority and women businesses (MWBEs) have faced hurdles in areas of market access and financing over the years. That is changing with growing awareness and education of the marketplace and a growing robust effort by corporate America to improve access. The increased knowledge and awareness has also positively impacted the private funding market which only serves to expand opportunity.

Breaking down barriers to access benefits everyone. Minority and women entrepreneurs are innovative and bring new perspectives to the marketplace. Angel investors can help them bring that innovation and creativity to the marketplace more easily by working outside of the mainstream financing system. A match between angel investors and an MWBE can produce results.

Of course, the MWBE entrepreneur must still use proven strategies that increase the likelihood angel investors will accept the business plan. When presenting a business plan to potential investors it’s important to show confidence and leadership, prove thorough knowledge of the competition and the industry, and above all, ensure the innovation and creativity of product, service and business is made abundantly clear. Once a company obtains angel investing, it is easier to move up a step into the next phases of financing which include venture capital and eventually commercial funding.

Angel investors can be ‘angels’ in many ways. They are not hemmed in by traditional processes which is exactly the way traditional barriers can be broken down.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Angel Investors Remain Committed to Business

Angel investors have been a “significant contributor to job growth” according to the University of New Hampshire Center for Venture Funding Angel Market Analysis Report. Entrepreneurs preparing business plans may also like to know that angel investments were made in healthcare (25%), industrial/energy (17%), biotechnology (14%), software (11%), media (8%) and retail (8%). In other words, angel investors invested in most industries the first half of 2011.

Government officials frequently talk about job creation. It’s interesting to learn that jobs are being created steadily through private investment in small to medium sized startups. Small business has always claimed that real job and economic growth relies on small business success more than the success of large corporations. In fact, two-thirds of new jobs in the U.S. are due to small businesses. Startups and small business expansion play critical roles in the economy and in promoting job growth. Since angel investors fund small business, that makes them just as critical to economic growth.

In 2011, angel investors created 134,130 new jobs. The angel investors also increased their seed and startup funding in the first 2 quarters of 2011. This was interpreted as a good sign because it reflects an increasing rate of small business development which means economic and job growth. If there is any doubt of the availability and economic influence of angel investors then consider the fact that the total amount of angel investments in the first 2 quarters of 2011 was $8.9 billion.

The data clearly shows that angel investors, despite their low profile, are a powerful economic force in the U.S. If you are interested in finding startup funding, rest assured there are angel investors interested in your plans.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

The Typical Angel Investor? No Such Thing!

Have you ever wondered where angel investors come from or what type of people you are going to present a business plan to? Is it a Donald Trump type of person – flamboyant and quite wealthy? Or is the investor someone more like your neighbor down the street who has quietly amassed a small fortune yet lives frugally? The truth is that the angel investor could be either person or a group of people.

The stereotype of an angel investor is someone who is a hardened business entrepreneur who has amassed great wealth but is always ready to create more. The image is of someone who swoops in, evaluates the business plan, does some inquiries and then funds a startup with the expectation of high returns. In reality, the angel investor may not be wealthy but is financially savvy.  Many are still employed but looking for a way to grow their money by promoting innovative new businesses.

Angel investors fill a gap that exists between the venture capitalist and the commercial lender. Venture capitalists and financial institutions lend larger amounts with the former willing to accept high risk and the latter expecting minimized risk. Many angel investors invest smaller amounts of money, $20,000 instead of $200,000, but there are no limits so $500,000 up to $2 million is possible. They don’t want to play an active role in the business, but do have business savvy. Mostly they just want to make money.

Angel investors are also groups of people who pool their money to fund startup businesses. They include investment clubs, professional groups like doctors or lawyers and even other entrepreneurs. The reason there is a bit of mystery surrounding angel investors is simply because they keep a low profile, so are difficult to categorize. What you do know is that they are financially savvy, thorough in their evaluation of businesses and hopeful of earning a high return on their investments. So don’t stereotype angel investors because they can be anyone.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Enter the Angel Investors at the Startup Stage

Financing a small business is done in stages with angel investors usually funding startup expenses. The amount of startup funding needed is figured in the business plan financial section along with projected revenues. Startup funding is actually just one stage of business financing because a new business must be funded from idea conception to expansion.

Businesses operate on a continuum. Initially, seed money is needed to do the original product development, business filings, research and market survey. The  entrepreneur often gets the seed money from personal savings, family and friends, or personal loans. Some even use their credit cards or house equity. In other words, seed money usually comes from personal resources because at this stage the business is only an idea and the risk of losing the money is too high.

Once it’s determined that the idea can be turned into a solid business, the picture changes. The business plan is prepared and the enterprise begins operating. At this point, the first revenues are generated which establishes the fact that the products or services are market viable. It is at this stage, often referred to as the series A or first round investment, that angel investors are approached. However, sometimes entrepreneurs will look for outside investors who will actually pay for startup. In other words, the business doesn’t begin operating until funding is obtained from venture capitalists willing to accept higher risk investments.

Angel investors can also be approached during the second round or series B investment stage. This is the stage at which initial expansion after startup takes place and funding is needed for inventory, staff or marketing expansion.  Later expansions using angel investments would be referred to as series C, series D and so on. In this way, each investor knows by investment reference how their investment ranks in the history of the business funding.

Eventually, a successful business will look for a larger funding source like a bank to finance a major expansion. Angel investors play an important role in the launch of new businesses and enter the business at one of its most critical stages. It’s no wonder they are called “angels.”

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Accepting Economic Challenges Via the Business Plan

Addressing today’s economic environment in a business plan may seem challenging, but it’s also the perfect time to prove you’re up to the challenge. In fact, angel investors are aware that successful ventures in a tight economy are poised for expansion when the economy improves. Successfully starting, managing and growing a business when the GDP is expanding at a sluggish 3 percent (like now) or less is indicative of a business with high growth potential as the economy returns to normal. Though capital access may seem tight, making it difficult to obtain venture funding, the fact is that it’s time like these where some of the greatest opportunity exists.

For example, tight markets mean less competition for both customers and funding. The people who succeed in this type of economic climate are the ones who have solid business plans and excellent ideas. The general quality of brands is necessarily raised because only the best can compete. These companies are attractive to investors looking to fund companies with growth potential.

Another way to look at the business climate is that businesses able to develop business plans that accommodate tight capital markets are more likely to attract angel investors. The reason is due to the fact the investors will recognize that the financially conservative business is prepared for economic downturns as well as upswings. Too many business plans begin with unreasonable expectations given market conditions. Clearly showing how your business will succeed in tight economic conditions is, at the same time, showing how the business is prepared to successfully maneuver during periods of uncertainty or even setbacks over the long term. Compelling business ideas coupled with managed risk is an excellent formula for attracting angel investors.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website. plan for a

Writing business plans to find angel investors interested in funding internet entrepreneurship is similar but not identical to writing proposals for brick-and-mortar only businesses.  A company that is going to be operated solely online still needs a strategic business plan that defines the business in detail, identifies market strategies to build a customer base, analyzes competition, lays out the operations and management plan and presents the financial plan. However, there’s a twist because investors will want to know how you plan on making your website stand out in a very crowded electronic superhighway and how you plan to attract and keep customers, who you will never meet, on the website long enough to spend money. There are millions of websites already up and running, but due to a lack of business planning they are virtually alone in a virtual world.

A strategic business plan for an internet based company must include the traditional business information, but it also requires planning for online design and content, online marketing strategies, website support and upgrades, online product ordering and security. Even planning for customer service has unique features in that contact will be primarily electronic. Angel investors will want to know how you will blend online and offline promotion strategies to insure maximum exposure. Internet marketing strategies address the marketing funnel in which customers are attracted to the website and then moved along a narrowing path to ordering and payment using a variety of well-designed enticements. A well thought out business plan for an internet based business addresses plans for accessing the right kind of business management technology to insure sales are captured using a virtual gateway and online shopping cart.

In other words, angel investors will review the business plan for thoroughness on two levels instead of one – traditional and electronic. Just because the business will be internet based doesn’t mean you can skip the traditional strategic planning. It only means you need to expand and integrate the unique features and requirements of an online business.

More detailed information and useful advice can be found at Created by Mark Favre, it offers expertise and assistance with developing and funding your concept, including a private forum for queries and discussions. If you need access to investors and funding providers, please do check our website.

Private Equity Financing for Major Projects

If you are looking for private equity financing for a major acquisition or business expansion project, the best approach is to use a firm that raises this type of financing for businesses. There are many good reasons for making this recommendation, and they are all for the benefit of the business needing an injection of capital.

  • Can identify the private equity financing groups that are most likely to be interested in your expansion plans
  • Shortens the time frame for finding and landing project money
  • Able to streamline the proposal process because have knowledge of what particular investors require before considering a proposal
  • Can assist business through all phases of the request process
  • Saves business time and money by handling many of the time consuming steps required in the search for investment money
  • Understands the entire process from beginning to end

In fact, a professional that specializes in finding financing for major business expansions or projects can also assess the availability of other types of funding including venture capital, business loans, and even angel investors. The process involves much more than just submitting a business plan. You have to balance the timing of the request, marketing efforts, selection of potential funders, negotiation process and the closing of the deal.

Experience Equates to Time Saving Efforts

It’s true that the process of finding funding from any type of investor including private equity, venture capital, angel investors or business loans can be time consuming. It’s a process that cannot be rushed but it can certainly be streamlined. Each phase of the process can be approached methodically and with a well defined strategy which leads to a targeted and thorough proposal.

Many companies have the expertise needed to be successful at producing products or services which is why they are looking for new funding. Yet many of these same companies do not have fund raising experience. The lack of experience can seriously delay the process. There are a number of steps that must be taken and using a professional that understands these steps makes success more likely and more likely to occur sooner.

Every Step of the Way

Following are some of the major phases that must be completed when applying for private equity.

  • Complete accurate valuation of business and business expansion project
  • Identify the potential financing alternatives
  • Prepare time schedule
  • Develop in-depth marketing plan
  • Market the proposal to funders
  • Respond to funder questions
  • Meet with prospective funders
  • Prepare and review financing proposals
  • Negotiate final terms
  • Prepare legal documents
  • Close
  • Identify reporting requirements

When searching for private equity, startup funding or any other type of business funding, businesses will find that using professionals experienced at raising funding can benefit the entire process from beginning to end. If you are like most businesses, once you decide the funding is needed there is no time to waste.

Potential Investors Come in All Shapes and Sizes

Finding investors is probably one of the more difficult activities you will have to do as long as you own a business. It doesn’t matter if you are just starting a new business and need startup funding or have been in business for years. Locating organizations or individuals willing to invest in a business is the easy step. Convincing them to actually give you the money is the hard one.

There are three ways to get money for your business. You can use your personal resources. You can bring in investors who take part ownership. You can get a loan in which the investor requires payback but not business ownership. Since most people aren’t millionaires, the majority of business funding for start up or expansion comes from outside the business.

Networking with the Right People

Investors come in all shapes and sizes. For example, you can bring in a partner who shares equal decision making authority in the form of an equal partner, but many entrepreneurs prefer to maintain control. But there are other ways to bring in partners without giving up the majority control of the business. For example, you can find equity partners who take a less than 50% ownership stake and will function as silent partners. They have no interest in day-to-day operations as long as their investment brings expected returns.

If you have no interest in bringing in partners, there is a network of organizations, funders, banks, private investors and even other firms looking for ways to earn greater returns than they can get in the marketplace. That is especially true today with interest rates near zero and an uncertain recovery underway.  They include business incubators, angel investors, royalties agreements, Small Business Investment Companies (SBICs), venture capital and others. If you are not familiar with any of these sources then you are arbitrarily limiting your search for investors.

The network of funders also includes business loans from banks or other commercial institutions.  Many entrepreneurs avoid banks and commercial institutions believing they will not qualify for funding.  But there is money available and by developing a high quality detailed business plan with the right elements, banks are much more likely to approve new loans.  Assuming up front you will be turned down is self-defeating.

Give Investors Want They Need to Know in Your Business Plan

A good idea for a startup business or for business expansion is not enough. Investors will look for certain things before even considering your ideas whether they are angel investors or equity partners or banks when it comes to business funding.

  • Your personal qualities as evidenced by a background check
  • The ability of business decision makers to successfully steer the new business or project to success while protecting funding investors have put into the business as proven by past experience
  • Likelihood the business or project will be able to pay off the loan or return investor money with interest
  • Ability to create an agreement that is acceptable to both the investor and the entrepreneur
  • Availability of collateral depending on the type of funding

It doesn’t matter if you search for angel investors or venture capital, it will be necessary to have a well thought out business plan that addresses these components. With a good business plan, you can then join the network of people and organizations that enable new ideas to hit the market and businesses to grow through business loans and a variety of other funding sources.

Shorten the Search Time With an Intermediary

If you don’t know how to find available startup funding or you need the money quickly, your best chance of success is using an intermediary. Though you pay a small fee for the service, an intermediary helps people become imbedded in the network of investors and funders which will greatly increase chances of finding the one or more who can support your business plan.

More detailed information and useful advice about investors for your business can be found at